Newsletter

Jon Shull Reflects on a 38-Year Career in Public Service

Looking back on my 38 years in public service, no period has been more rewarding than my time at the California Joint Powers Insurance Authority. This is not to say I do not appreciate the other public agencies I worked for and the people that mentored and taught me the practice of local government and public administration. I was fortunate over the years to work alongside some of the legends of Southern California local government: Gaylord Knapp, Paul Lanspery, Art Gallucci, Doug LaBelle, Dennis Courtemarche, Andy Lazzaretto, Fred Latham, and, most influentially, Bill Holt, who hired me at the Authority and changed the course of my career and life.

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I have loved working at the Authority these past 28 years. Bill and I worked closely from the outset to envision what the organization could be. When he announced his retirement and suggested that I should be his successor, I was gratified by the Executive Committee’s immediate acceptance of his recommendation. Bill set a strong foundation for the organization; I was expected to build upon that strength.

Early on, I focused on the concept that our team would best serve the members by trying to prevent claims rather than only dealing with their consequences. With that in mind, we expanded our training and risk management programs immensely, making them the core of our member service activities. Claims management was still crucial, and we continue to do it well today, but the cost of accidents and injuries prevented is immeasurable.

If the Authority’s transformation from a “claims management” organization to a “risk management” organization were to be my legacy, I would be proud of that.

One of the most important things I did at the Authority was learning to carefully hire the right people and then get out of their way so they could successfully serve the members. I have been fortunate to surround myself with the best employees. I am thankful for their dedication, hard work, and camaraderie, and I will miss spending time with them.

Another part of our team to whom I am grateful is our community of best-in-class business partners. Our third-party administrators, brokers, defense panel members, subject matter experts, insurance carriers, public relations firms, and many other service providers all represent the best of the best. I am proud to have been associated with them.

I am grateful to our members who have embraced our programs, employees, and business partners as we promote risk management within their organizations. Our member agencies’ staff members play critical roles in keeping the public and employees safe. Member engagement is essential to our sustainability as a member-driven risk management pool.

A stable, amiable, and forward-thinking Executive Committee has long been a key to the Authority’s success. It has been my pleasure to work for some fantastic bosses that have prided themselves in working well together. I have long marveled at their ability to leave their local political issues at home when they came to conduct the Authority’s business. I am thankful for their support, recognition, and forgiveness during my tenure.

I am also thankful that Alex Smith joined our organization over 14 years ago. First hired as our finance director, Alex quickly demonstrated a keen ability to create synergies among employees, members, and programs. As he ascended through the organization, he continued to broaden his understanding of all our operations and our industry’s best practices. As my successor, I am pleased to share that Alex is way more prepared to lead this organization than I was when I got the job. Plus, he has a stronger support team to keep the organization moving forward. The future of the Authority under Alex’s leadership is bright.

Finally, I am thankful for the support of my family, as we have lived the Authority life. My wife, our children, my parents, and my brother have all been important contributors to my career, education, and my physical and emotional well-being. I am forever grateful for their understanding of my late nights at work, their forgiveness for missed family events, and their enduring love and support.

As this chapter closes, I will look back on it fondly. It is a great prologue for the next chapter yet to be written.

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California JPIA Selects 2023 Capstone Award Finalists

The California JPIA has selected five 2023 Capstone Award finalists for recognition at the 28^th Annual Risk Management Educational Forum, August 30–September 1, at the Omni La Costa Resort in Carlsbad. The Authority presents the Capstone Award annually to an individual who best exemplifies the practice of public sector risk management.

Congratulations to this year’s finalists!

• Alexa Davis, Assistant City Manager, City of Rolling Hills Estates
• Audrey Cray, Finance and Risk Manager, City of Pacific Grove
• Heather Reiter, Training and Safety Specialist, Midpeninsula Regional Open Space District
• Linda Reid, City Clerk / Human Resources Director, City of Buellton
• Raylette Felton, Deputy City Manager / Human Resources / Risk Manager, City of Lawndale

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Nominated by colleagues from across the Authority’s member agencies, each finalist exemplifies the following criteria:

• Works to support traditional or enterprise risk management efforts
• Develops, implements, and administers loss prevention and loss control programs to mitigate risk exposures
• Coordinates support systems that serve risk management goals and needs
• Influences others in developing quality risk management programs

The California JPIA will honor one of these finalists as the Capstone Award recipient during a ceremony at the Forum on Thursday, August 31, 2023.

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Save the Date for the Workers’ Compensation Symposium

Mark your calendars for the Workers’ Compensation Symposium on September 6, 2023, from 9:30 a.m. to 2:00 p.m. at the Authority’s La Palma campus. The event features a diverse agenda to address critical workers’ compensation issues. Members can learn and discuss pertinent subjects related to their agencies’ workers’ compensation programs.

The program includes five presentations highlighting emerging issues and important topics on workers’ compensation. “This year’s Symposium includes a wide variety of dynamic speakers who will address recurring issues our members face regularly,” said Jeff Rush, workers’ compensation program manager.

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Schedule highlights include:

9:45 a.m., Tammy Daniels from Safety National will delve into the effects of medical inflation, shedding light on this pressing concern.

10:15 a.m., Henslee Smith, Esq., will share valuable subrogation lessons learned.

11:00 a.m., Alicea Reddy from the First Responder Support Network will highlight the importance of prioritizing mental well-being in high-stress professions like public safety.

11:30 a.m., Tim Rose and Josh Goldsmith of Siegel, Moreno & Stettler will provide insights on effectively handling conflicting medical opinions, known as “dueling docs.”

1:00 p.m., Bill Larkin, Chrisi Fajardo, and Schaunna McEachron from Athens Administrators will provide a glimpse into the daily life of a claim examiner.

“I’m excited to feature some of our Athens team, who will provide valuable insight into how they serve our members and their injured employees,” said Rush.

The symposium promises to be informative and engaging, offering attendees a unique opportunity to learn from industry experts and gain valuable insights into the latest trends and best practices.

For more information about how to participate in the symposium, please visit the event website or contact Jeff Rush by email or at (562) 467-8707.

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Still Clear As Mud: Revisiting California Wage and Hour Laws in the Public Sector

By Katy A. Suttorp, Partner, Burke, Williams & Sorensen, LLP

In 2016, the Authority published “Clear as Mud: California Wage and Hour Laws in the Public Sector.” In the seven years since then, despite scores of new legislation and court decisions, our understanding of which sections of California’s Labor Code or IWC Wage Orders apply to public agencies has not improved appreciably. As before, clarification regarding which sections apply or not to various types of agencies has developed on a case-by-case basis from California’s lower appellate courts.

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In the years since California employers have continued to deal with new developments in California wage and hour law that have resulted in significant changes to their personnel policies and practices. Although the language of some of the new legislation has expressly addressed whether public agencies are within the scope of “employers” who are subject to the new laws, the California Legislature has not always been so clear regarding its intent.

As in the initial article from 2016, this update will briefly address some of the most common questions public employers have continued to ask regarding which California wage and hour laws do (or do not) apply to public agencies (and if so, which ones) and will provide a brief overview of the analytical framework that California courts typically apply in evaluating claims by public employees who are seeking the benefit of provisions that apply to employees in the private sector. This update also briefly mentions the Court of Appeal’s decision in Stone v. Alameda Health System,[1] for which the California Supreme Court granted review last month.

Wait, Don’t We Only Have to Worry About the Fair Labor Standards Act in the Public Sector?!

While the federal Fair Labor Standards Act (“FLSA”) is often the primary source regulating wage and hour requirements for public employers, it is clear that at least some California wage and hour laws, whether by their express terms or because of the judicial ruling, also apply to certain public employers and employees.

What Are Some of the California Wage and Hour Statutes That Expressly Apply to Public Employers, and Are There Any That Expressly Exclude Public Employers?

Some California wage and hour laws that expressly apply to public employers include:

• The Healthy Workplaces, Healthy Families Act of 2014, which requires employers to provide paid sick leave to their employees[2] and defines “employers” to include “any person employing another under any appointment or contract of hire and includes the state, political subdivisions of the state, and municipalities.”[3]
• Section 1030 of the Labor Code, which requires accommodation of reasonable lactation breaks, specifies that “employer” includes “the state and any political subdivision.”[4]
• Revisions to Section 1182.12 of the Labor Code implementing the schedule of minimum wage increases (currently $15.50 per hour as of January 1, 2023) and specifying that its provisions apply to “the state, political subdivisions of the state, and municipalities.”[5]
• Sections 550, 551, 553, and 554 of the Labor Code imposing a “one day’s rest in seven” rule upon “cities which are cities and counties and the officers and employees thereof.”[6]

Some California laws that expressly exclude some local public employers from their scope include:

• Section 220 of the Labor Code, which provides: “Sections 200 to 211, inclusive, and Sections 215 to 219, inclusive, do not apply to the payment of wages of employees directly employed by any county, incorporated city, or town or other municipal corporation. All other employments are subject to these provisions.”
  • This means that California rules, such as the timing of final paychecks and paydays[7] and waiting time penalties, do not apply to the types of entities specified in Section 220.

• Section 226 of the Labor Code, which contains numerous payroll-related requirements such as itemized wage statements but specifies:
  

  This section does not apply to the state, to any city, county, city and county, district, or any other governmental entity, except that if the state or a city, county, city and county, district, or other governmental entity furnishes its employees with a check, draft, or voucher paying the employee’s wages, the state or a city, county, city and county, district, or other governmental entity shall use no more than the last four digits of the employee’s social security number or shall use an employee identification number other than the social security number on the itemized statement provided with the check, draft, or voucher.[8]

However, many sections of the Labor Code are silent regarding the types of “employers” they apply to. As one court noted, “Our review of the Labor Code revealed that it is not a model of uniformity in its references to public employees.”[9]

Have the Courts Provided Any Recent Guidance as to Which Other Labor Code Provisions Apply or Not to Public Sector Employers?

Yes, in recent years, the California Courts have ruled on several claims by employees of various types of public agencies, resulting in the following determinations:

• Labor Code sections 510 [daily overtime] and 512 [meal periods] are not applicable to water storage districts.[10]
• Labor Code sections 512 and 226.7 [cool down recovery periods] are not applicable to corrections officers with the California Department of Corrections and Rehabilitation.[11]
• Labor Code section 226.8 [willful mis-classification of independent contractors] is not applicable to water districts.[12]
• Labor Code section 203 applies to employees of a non-profit public benefit corporation that operates charter schools.[13]
• Labor Code sections 223, 226, 226.7, 227.3, 246, 510, 512, and 2802 are all part of the “same statutory scheme” and are not applicable to the San Diego Convention Center Corporation because it is a “public entity” due to various factors showing the Corporation “is an extension of the City of San Diego.”[14]

What About the Industrial Welfare Commission (“IWC”) Wage Orders – Do They Apply to Public Agencies?  Are There Any Relevant Court Rulings?

As was the case at the time of the 2016 article, the answer varies. Please see the discussion in that article for details on the wage orders. In sum, to say that the current status of the law interpreting the applicability of the Labor Code and IWC Wage Orders to various public employers is unclear continues to be an understatement.

How Would a Court Decide Whether My Agency Has to Comply with Other California Wage And Hour Laws?

In 2016, this article identified several steps courts typically proceed through while analyzing whether a given wage and hour provision applies to a particular public agency. As before, public agencies may wish to apply a similar sequence of analysis in evaluating which requirements under California law could arguably apply to them. However, as explained further below, agencies may wish to exercise some caution in relying solely upon the general maxim that public employers are excluded from the application of a statute unless expressly included until the California Supreme Court issues a ruling in Stone.

• • Check whether the statute or wage order at issue includes a definition of “employer” or other terms regarding applicability that expressly includes or excludes public agencies.
    • If so, determine which types of public agencies are included/excluded.
      • Express identification: If a statute or wage order expressly applies to your type of public agency, whether a city, county, special district, Joint Powers Authority, or otherwise, then the analysis will likely end there, and if included, your agency may wish to take steps to comply.[15]
      • Categorical identification: As noted above, it is important to bear in mind that the Legislature is not always consistent in identifying which agencies are subject to or excluded from a given requirement. Instead, the Legislature may use broad, categorical terms such as “municipal corporation,” “quasi-municipal corporation or “political subdivision.” These terms, in turn, can be open to judicial interpretation concerning particular types of agencies or even individual entities.
        • For example, in Gateway, the Court of Appeal examined the meanings of “other municipal corporation” and “quasi-municipal corporation” as used in Section 220(b) of the Labor Code to exempt certain public employers from complying with waiting time penalties. According to the Court there, relevant factors included whether the agency “perform[s] an essential government function for a public purpose; . . . . whether an elected board of directors governs the entity, whether the entity has regulatory or police powers; whether it has the power to impose taxes, assessments, or tolls; whether it is subject to open meeting laws and public disclosure of records; and whether it may take property through eminent domain.”[16]
    • If not, consider relevant case law (if any). Even if a provision does not expressly apply to public employers, a court may have previously issued an opinion as to whether that provision or an analogous one applies to your type of public agency (or possibly, to your actual agency.)
  • Apply rules of statutory construction or consider other indicators of Legislative Intent. Courts often use rules of statutory construction to analyze legislative intent behind ambiguous statutory language.[17] In recent years, and most notably in Stone v. Alameda Health System, the Courts of Appeal have focused particularly on maxims, such as the “general rule” and “sovereign powers,” in an effort to discern specifically whether the Legislature intended particular Labor Code or wage order provisions to apply to certain public employers.

General Rule: Requirement of Express Applicability to Public Employers

Many agencies are familiar with the quote from Johnson that “absent express words to the contrary, government agencies are not included within the general words of a statute.”[18]  In discussing this “rule,” the Johnson court cited a prior California Supreme Court decision and explained:

In the context of reviewing the legislative history of [a prior version of § 1102.5], the court in Campbell v. Regents of University of California . . . quoted the Senate Committee on Industrial Relations as follows: ‘These provisions are silent as to their applicability to public employees. Generally, however, provisions of the Labor Code apply only to employees in the private sector unless they are specifically made applicable to public employees.’ . . . . The Legislature’s iteration of this rule is an indication that the Legislature follows it. . . .[19]

The Johnson court also briefly considered and dismissed the employee’s argument under the “sovereign powers” doctrine, as explained by the Court. “[U]nder the “sovereign powers” maxim, government agencies are excluded only if their inclusion would result in an infringement upon sovereign governmental powers.” The Court stated, “[W]hile the ‘sovereign powers’ principle can help resolve an unclear legislative intent, it cannot override positive indicia of a contrary legislative intent.” The Court pointed generally to its earlier discussion of statutory construction, including the “general rule,” as sufficient “positive indicia.” In addition, the Court concluded that requiring the District there to comply with the challenged overtime and meal period sections would infringe upon its right under its enabling statute to set employee compensation.

The courts have continued to articulate a version of these principles to date.  However, since Johnson, some courts have not used consistent terminology in explaining the applicability of this rule to particular agencies or consistent approaches in applying the framework that Johnson appeared to articulate.

For example, in addressing potential eligibility for exemption from Labor Code under the “general rule,” the court in Allen used phrases such as “governmental actors,” “public employer,” “public entities,” and “government entity,” seemingly interchangeably in one opinion and did not consider the presence or absence of “sovereign powers.”[20]

Most recently, the Court of Appeal in Stone relied primarily on the enabling statute for the Alameda Hospital Authority to find that there was no “indicia of legislative intent” of exclusion from certain Labor Code requirements and to find that the Authority “conspicuously lacks many of the hallmarks of sovereignty.”[21]  Under this approach, the Court ruled that even though the Authority is a “government entity,” the absence of evidence of “sovereign power” meant that it is not a “public agency.” In turn, this meant that the Authority was not entitled to the benefit of the “general rule” of inapplicability of Labor Code requirements, and so was not exempt as a matter of law from many of the claims by two former employees pertaining to meal and rest breaks, overtime, and payroll records.

Conclusion

As the discussion above demonstrates, although some additional guidance is available from the Legislature, IWC, and courts, much remains unresolved regarding the extent to which many aspects of California wage and hour law apply to public employers, whether due to ambiguity regarding the scope of certain exclusions, differing standards for establishing legislative intent, or varying opinions by courts regarding sufficient forms of sovereign power.

As noted above, the California Supreme Court granted review of Stone last month.  Among the issues the California Supreme Court is expected to address are whether possession of “sovereign powers” is determinative of whether the “general rule” can apply to a public employer and whether the definition of “other municipal corporation” for purposes of exemption under Labor Code section 220(b) should be based on the factors identified in Gateway Community Charters or determined under a broader standard.

For now, agencies continue to face a complex, confusing, and shifting statutory and regulatory scheme that offers few clear answers and under which a provision that does not mention public employers might nonetheless be found to apply to some or all public employers.

Accordingly, while the federal FLSA continues to be the primary source of wage and hour requirements for public employers in many respects, prudent agencies should also evaluate on a case-by-case basis whether a particular California wage and hour law might apply to some or all of that agency’s employees.

Overall, given the nuanced and fact-specific nature of the legal issues involved, employers are reminded to raise concerns regarding specific state or federal wage and hour issues with legal counsel.

 

 [1] Stone v. Alameda Health System (Cal. Ct. App. 2023) 88 Cal.App.5th 84 (rev. granted May 17, 2023).

 [2] Cal. Lab. Code §§ 245-249.

 [3] Cal. Lab. Code § 245.5(b).

 [4] Cal. Lab. Code § 1030.

 [5] See Senate Bill No. 3, Section 3, signed by the Governor and filed with the Secretary of State on April 4, 2016.  Because it was not urgency legislation, the revisions did not take effect until January 1, 2017.

 [6] Cal. Lab. Code  § 555.

 [7] Cal. Lab. Code § 201(a) (discharged employee) and § 202(a)(voluntary quit).

 [8] Cal. Lab. Code § 226(i).

 [9] Sheppard v. North Orange County Regional Occupational Program (2010) 191 Cal.App.4th 289, 307.

 [10] Johnson v. Arvin-Edison Water Storage District (2009) 174 Cal.App.4th 729.

 [11] California Correctional Peace Officers’ Association v. State of California (2010) 188 Cal.App.4th 646, 651-652.

 [12] Bennett v. Rancho California Water District 2015 WL 3814458, at *7 (unpublished).

 [13] Gateway Cmty. Charters v. Spiess (Cal. Ct. App.  2017) 9 Cal.App.4th 499, 502.

 [14] Allen v. San Diego Convention Ctr. Corp., (Cal. Ct. App. 2022) 86 Cal.App.5th 589, 599.

 [15] Note, however, that there is usually an argument to be made that a statute that regulates the wages of public employees, even one made expressly applicable to public employers, infringes on the sovereign power of public entities.

 [16] Gateway Cmty. Charters v. Spiess (Cal. Ct. App.  2017) 9 Cal.App.4th 499, 506

 [17] Other common rules include the following: “[W]hen the Legislature has employed a term or phrase in one place and excluded it in another, it should not be implied where excluded” Pasadena Police Officers Assn. v. City of Pasadena (1990) 51 Cal.3d 564, 576. “When two statutes touch upon a common subject, they are to be construed in reference to each other, so as to harmonize the two in such a way that no part of either becomes surplusage.”  DeVita v. County of Napa (1995) 9 Cal.4th 763, 778.

“[A] word may be defined by its accompanying words and phrases, since ‘ordinarily the coupling of words denotes an intention that they should be understood in the same general sense..” Gateway Cmty. Charters,  9 Cal.App.4th 499 at 504.  In Latin, this principle is called noscitur a sociis. “[W]here general words follow specific words, or specific words follow general words in statutory enumeration, the general words are construed to embrace only things similar in nature to those enumerated by the specific words.  Id. In Latin, this principle is called ejusdem generis.

 [18] Johnson, 174 Cal.App.4^th 729 at 736.

 [19] Id.

 [20] Allen, 86 Cal.App.5th 589

 [21] Stone, 88 Cal.App.5th at 89.

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Authority Launches Leadership Series for Member Staff

The California JPIA remains committed to advancing the professional growth of our member personnel. As part of our comprehensive approach, we developed a Leadership Series for all levels. The series is a collection of courses designed to improve the supervisory competencies, communications skills, and decision-making capabilities of member staff.

Each course is three-and-a-half hours long, and members can schedule a single course to be offered twice in one day or two courses on the same date. Staff interested in beginning the Leadership Series may contact their Training Registrar to schedule the courses.

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Leadership Series courses are listed below and can be taken in any sequence.

The following courses were developed for employees of all levels.

• Developing Good Decision-Making Skills
  Having our personnel make good decisions is critical for any organization, especially public agencies. This course will help attendees learn about the influences we all experience when making decisions. The influences of organizational culture, “unwritten” rules, and the status quo are evaluated in this course.

• Emotional Intelligence
  Emotional intelligence has many relevant applications in the workplace. Some highly skilled employees in their position of responsibility may not recognize the need for emotional intelligence to help them be more effective team members. Emotional intelligence is very relevant for supervisors since the position requires interacting with a team of subordinates. Your ability to recognize the emotions in yourself and others is vital when trying to influence those around you. This course will cover the central tenets of emotional intelligence.

• Ethics as a Successful Business Model
  The need for organizations to conduct themselves ethically is of great importance, particularly for public sector organizations. This course provides the framework for ethical conduct by employees as a best practice and an effective business model.

• Everyday Teamwork
  Public sector teamwork has always been an asset for any city, agency, and organization. The ability to achieve high performance on a team takes effort, but it also requires a strategy. This course will address a team’s “people dynamics” within different parts of a city or agency. It should be recognized that different parts of an organization have differing needs, perspectives, and cultures.

• Generational Issues in the Workplace
  Different generations in the workplace can provide the diversity of thought needed for an organization to move forward and remain relevant. However, generational differences can lead to conflict. This course aims to understand all generations in the workplace while simultaneously building a cohesive team.

The following course was developed for team leaders and future managers and supervisors.

• Communication Skills for Supervisors
  Supervisors will learn how to use Motivational Conversation as an effective tool to move their team toward improved performance. Motivational Conversation is a powerful tool to be used for the benefit of the group, team members, and the organization. It helps create the desired culture for the organization and team goal setting.

The following course was developed for middle managers and supervisors.

• Executive Communication
  As effective leaders and communicators, we need to have our employees understand the intent of our message and why it is crucial to the organization. We can have the best intentions to make the team, department, or entire organization better, but in too many instances, the message is not understood, or it is poorly received. This training provides strategies to help your team understand the ideas you are presenting and tactics for implementation.

Please see the course catalog for additional descriptions of each class. Staff interested in beginning the Leadership Series may contact their Training Registrar to schedule the courses. Those with questions for the California JPIA can contact the training division.

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